As the premiers meet this week in Victoria, a number of provinces are clearly distressed about the federal government’s plan to reduce the automatic annual increase in health transfers from the current 6% to the rate of economic growth starting in 2017-18.

While the announcement has not been applauded by most premiers and their respective health ministers, it is long overdue. The reason is quite simple: after decades of chatter, including millions of wasted tax dollars on government ‘commissions,’ this new funding arrangement is the only way provinces will be encouraged to introduce meaningful and sustainable health care reforms.

The 10-year health accord introduced by Prime Minister Paul Martin in 2004 was intended to improve timely access to high quality medical care across the provinces while making government health care more sustainable. Yet, as the health accord is set to expire in 2014 – and billions of dollars later – significant reductions in wait times have not been achieved. Around 4.4 million Canadians or 15% of the population aged 12 and older do not have a regular family doctor. At the same time, government health expenditures take up an increasing share of provincial revenues across Canada, already accounting for half of total government revenues (including federal transfers) in both Ontario and Quebec.

Clearly, the 2004 health accord did nothing to improve access to medical services or help governments attain a sustainable level of health spending.

In fact, the health accord may have worsened the health care landscape in Canada as it failed to create any incentives for provinces to introduce meaningful reforms. Instead, they simply relied on the feds to bail them out with more cash.

With any luck, the era of conditional health care funding and restrictive health care reform is over. Notably, if any criticism can be made of Ottawa’s decision to tie transfers to the rate of economic growth – five years from now – it’s that Ottawa’s glacial pace to fiscal reform might well be matched by provincial lethargy on health care reform.

While some financial assistance from the federal government might be required, generally speaking, the provinces should find their own ways of delivering and financing medical services, exactly what Ottawa proposes. Importantly, this does not mean that health care in Canada will no longer be universal, or that the ability to access high quality care will depend on what coast you live on, or your family’s ability to pay.

What it does mean is that the provinces will have to innovate and figure out alternative ways of financing medical services. This might require political will from our politicians; it might require political courage to step outside of their comfort zone and look to other jurisdictions that achieve universal access to health care by incorporating alternative financing methods.

But most of all, it does not mean moving towards an American-style health care system. There are numerous European countries that achieve universal health care by incorporating a competitive private sector for financing medically necessary services.

Critically, provinces are almost out of time. Provincial governments cannot afford to wait until health care spending takes up 100% of revenues, especially in provinces like Ontario which currently faces a $16 billion deficit.

Raising taxes and/or cutting medical services are not viable solutions and are harmful to taxpayers and patients alike. This is why the provinces should be thankful for the opportunity to experiment with alternative financing schemes.

This announcement from the federal government was inevitable. It was always naïve to assume that Canada could continue to finance health care through a single-payer monopoly indefinitely. We are the only country in the developed world that effectively prohibits its citizens from purchasing private health insurance for medically necessary services; we are one of the few that does not require patient cost sharing in the form of co-payments or user fees at the point of service.

The federal government maintains that it supports a universal health care system. That is positive. However, that does not require a government health insurance monopoly. Ottawa should allow the provinces to experiment with alternative financing models commonly practiced throughout the developed world. The feds should make it explicit that they will not impose financial penalties on provinces that experiment with user fees and extra billing or voluntary private insurance options.

Allowing the provinces to experiment with private financing models is long overdue. Instead of bemoaning and fighting the new funding arrangement, provincial governments should stop wasting time and playing politics, and start experimenting with European-style health care options for patients.

Mark Rovere is Associate Director of Health Policy Studies at the Fraser Institute.

His column is distributed by Troy Media – www.troymedia.com.